How does Zoom make money

How Does Zoom make money? Secrets Behind the successful Zoom Business Model 2022

How Does Zoom make money? The answer to this question is simple. The most distinguishable difference between Zoom and its competitors is that it doesn’t charge a monthly fee. The company makes money through advertising on the platform itself or other companies that create products for Zoom.

All other platforms require you to pay a monthly fee, which does not appeal to every user and, in turn, allows them to make more money. For example, when you’re using a fitness app, you can see ads every time you log in or on any of the pages of your fitness tracker. You will undoubtedly be offered information regarding publicity shows for other users using a social networking platform like Twitter, Facebook, Instagram, or LinkedIn. It happens because these companies pay for the advertisements and their rules or how they want to promote their products. 

It has been an enormous success for those social media companies: people are looking for more and more ads on the websites they visit, and in the case of Facebook, you can even see ads in your messages.

Zoom, however, doesn’t have to pay any fees because it’s not a social media platform. They don’t have to show ads every time you log in and can create different ways to promote their products. They only have to look at the analytics to know if the advertising has succeeded. We must keep in mind that one of Zoom’s biggest competitors is Facebook.

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It means they can’t just rely on the ad revenue they collect through Facebook. Social media is an essential part of our lives, and it has been a massive success for these companies, but social networks alone cannot generate enough revenue to support them.

Zoom makes money through affiliate marketing, which means that if a person clicks on one of its ads and buys one of the products Zoom recommends, they will earn a commission. The company also has a data-sharing program with Facebook called Facebook IQ. The more people visit the website using Facebook IQ, the more money is made by both parties.

Facebook IQ was launched in 2007 and is now available in 19 languages. It is unclear if the social network has provided any of its users’ data to Zoom, though some critics have expressed concern that Facebook’s user base could be used as a “target group” for advertisers.

In Mid-2015, Zoom announced the terms of a settlement agreement with the FTC, which included an “agreement to never knowingly misstate the amount of commission earned from affiliate marketing, or make any misleading or exaggerated claims about commissions.”

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What is Zoom? Who Founded it?

Zoom is an American Video communications technology company. The headquarter of Zoom is in San Jose, California, United States. It provides online video interaction and chats services through a cloud-based p-to-p (Peer to peer) software platform.

It is very helpful in distance education, telecommunicating, social relations, and teleconferencing.

Arriving in the United States of America, Yuan joined WebEx, one of the first 20 employees, for a web-based conference. In 2007,  Cisco Systems bought the firm, and Yuan became the vice president of engineering. Yuan introduced Cisco management to a new smartphone user-friendly video conference solution in 2011.

Yuan has launched a new user-friendly video conference system for Cisco management. When the proposal was dismissed, Yuan departed Cisco for Zoom Video Communications, his own firm. 

Zoom was converted into a public business in 2019, with the first public offering turning Yuan into a billionaire. Zoom benefitted from online employment and education during the pandemic during the COVID-19 pandemic. Yuan amassed a net worth of over $16.4 billion on September 1, 2020, which was 360 percent greater than its net value at the start of the year. Yuan was moved to the Grantor Retained Annuity Trust in March 2021, valuing $6 billion of Zoom shares to Yuan as a trusted member.

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History of Zoom & How Did it Get Started?

Zoom is a different kind of video chat for businesses. It is not only about seeing and hearing each other but also allows you to share your screen, put your heads together on a single project and do anything from group brainstorming training sessions or meetings. With Zoom, what you say and do is always in sync. 

In 2011, Eric Yuan (Chief Executive Officer), a former executive of Cisco WebEx, created Zoom for a video and online conference. Before Zoom’s inception in the lead engineering teams, Yuan had spent 14 years at WebEx, followed by Cisco in 2007 when he took over WebEx.

After many rejections, his 9th visa application finally got approved, and then he joined WebEx in 1997 as one of the company’s first software engineers. At Cisco, he regularly observed how dissatisfied consumers were with the failure to hear their requests and the long product development process.

Whenever a person signs in to a WebEx session, its systems would have to categorize its product version like Android, iPhone, PC, or MAC to run, which slows down processes. The connection would be inadequate if too many people were online, leading to low audio and visual quality. Moreover, there was a lack of app functionality, such as mobile screen sharing.

Zoom Video Conference Facility
Zoom Video Conference Facility

In 2011, Yuan decided to go alone – to ensure that a team of 40 engineers from Cisco was involved in the process. Initially, they started their company with Saasbee, but it was rebranded to Zoom shortly after that. Initially, Zoom confronted obtaining investors since no one thought that current powerful companies like Skype, WebEx, and Hangouts by Google were being retracted. Fortunately, Eric Yuan’s network included Subrah Iyer, the former Ceo of WEbEx. Iyer’s deep technical experience helped Yuan with essential credibility to secure around $3 million for the seed round.

In 2013, Zoom launched its initial products and announced a Series A round of $6 million. Product quality immediately emerged, and became one of the leaders in the field of videoconferencing. The capacity to host 40 people simultaneously might be used for video conferencing on all computer hardware platforms, such as desktops, tablets, and mobiles.

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Due to the substantially reduced cost of Zoom, buyers flooded straight from the start. Shortly after its introduction, the company accumulated a client base of over 1,000 companies, hosting 140,000 meetings. By May 2013, the magic threshold of one million participants was attained by Zoom. Zoom added many features to its platform, which attracted new customers.

How Does Zoom make money?

Zoom is a free video-conferencing service that lets you talk to each other online. If you’re anything like us, this is something that you probably use regularly. But how does Zoom make money? Here are eleven tips to help understand the financial side of Zoom without any knowledge of accounting:

How does Zoom make money?
How does Zoom make money?
  1. You don’t have to pay Zoom anything — but they still get paid for it all! 
  2. Zoom is a “freemium” company.
  3. Zoom sells add-ons
  4. Most of the money is in the conferences, not the add-ons.
  5. Selling services to businesses is essential for Zoom, even if it’s a small part of their overall income.
  6. Zoom makes good money from the business to business (B2B) sales, but the costs of those sales offset this.
  7. Zoom makes money from the conferences.
  8. Each paid user is “ticketed” at $40 per month, which is only charged pro-rata.
  9. Zoom doesn’t try to make any money from the free users — it’s just not profitable for them to do so
  10. You can forget about the “free version” of Zoom, just like you can forget about a free version of Skype (one of its competitors)
  11. Zoom uses a freemium model with a twist.
  12. So how does Zoom make money? Here’s the answer…
  13. Zoom is a free video-conferencing service that lets you talk to each other online. If you’re anything like us, this is something that you probably use regularly. But how does Zoom make money? People use Zoom to use their internet data. Without the internet, people won’t be able to use it. Zoom earns money whenever people use their platform by using its data. Not only that, but It also has premium plans for the customers. 

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Zoom Premium Features

Zoom is a graphical and multi-platform video conferencing software that offers many features to users, such as Video recording for meetings and live lectures, Audio and Video chat, Screen share, etc.

Zoom Plan List
Zoom Plan List

But there are some limitations to the accessible version of Zoom. The usage time limit on the free version is just 40 minutes, and only 100 users can attend a meeting or chat simultaneously.

To increase these limits, users have to pay subscription fees. That will help improve participants up to 1000, and the maximum time limit will be increased to 30 hours. The users will also get a cloud recording facility on the subscription plan. The prices of the plans may vary or change. You may check the current plans and fees on the Zoom Official Platform.

What is Zoom Phone?

Zoom Phone is a website that converts your phone number into a unique URL. When someone calls you, the call will route directly to your computer. You can also set up calls to be routed from one of your phones or forward calls from multiple numbers through the Zoom Phone account. Zoom makes it easy for you to control how people get in touch with you.

How do Meetings and Chats work on Zoom? Also, Elaborate Video Webinars of Zoom.

Zoom is an online meeting application that allows you to message and talk with others over the internet. Zoom is stable, fast, and secure for small- or large-group conversations for any use case (video conferencing, chat, webinar). You can also conduct this video conference from your browser. Zoom is helpful for online meetings, product demos, training sessions, and webinars.

A Zoom meeting is like a regular meeting in some ways. You will need to create a meeting with other participants in your organization. Each person joining the panel must have Zoom installed on their PC. Also, each person should have Microsoft Office PowerPoint installed on their computer.

Zoom Video Webinars offer a range of services for both business and personal needs. They offer webinars on various topics related to your business, and Zoom helps with meetings that can be scheduled and recorded at any time. All these things depend on the plans.

Zoom Plans
Zoom plans

The maximum usage time limit for the free version is 40 minutes, and the ultimate user count limit is 100. For the premium version, the participant’s limit will be increased to 10,000, and the maximum time limit is 24 hours.

You may share video, audio, and your screen as the webinar organizer. In addition, participants can utilize the chat or question and answer to communicate with the host webinar.

According to your requirement, you may choose the plans. According to your requirement, you may select the plans. Either you may organize webinars once, repeat them sequentially, or you can have the same session several times.

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Why Do You Need Zoom App?

Since there are so many video conferencing apps, what about Zoom App makes it stand out? Zoom offers some great features that its competitors do not. The ability to have HD audio and video is one, as well as the large screen size. Along with these features, Zoom App offers a stable platform for mobile video calls without downloading any other app on Android or IOS devices.

Other video conferencing apps allow you to meet other users similarly, such as Skype and FaceTime. However, these apps require you to download them on your device. Zoom App is different as it is a web app that can be accessed anytime, anywhere through a mobile browser by going to Zoom.

Zoom monthly active users

By the end of September 2017, Zoom has reached two million monthly active users. With Zoom, users can make video calls, chat, and share screens with others. 

Video calling is a convenient way to stay in touch with family and friends when they live far away or when you’re too busy to schedule an in-person meeting. So it’s not surprising that more than two million people use Zoom every month.

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Zoom Competitors

Zoom is an American multinational video conferencing and phone software company. Zoom took advantage of the global rise in social media by incorporating cameras into their software: for occasional or daily use in the workplace or personal life.

It is known for its innovative online meetings where people can chat live and see each other face-to-face without finding a place. Zoom’s camera technology allows users to see different locations from one another with just a few clicks. Who are the competitors of the Zoom app? Well, these are some of the apps that might compete with Zoom:

  • Skype
  • FaceTime
  • Facebook Messenger Video Chat
  • WhatsApp 
  • Google Hangouts
  • WeChat 
  • Viber 

On which platforms Zoom app is available?

Zoom is available on Play Store, App Store, and Microsoft Store, and it can be installed on iOS, Android, and Windows Phone devices. As of January 4, 2017, over 100 million users installed Zoom on their devices. After 2020, it crossed 500 million. Here is a video where you will learn ”How to host a virtual meeting or class on Zoom?”

Host Virtual Meetings on Zoom

Credits: Teacher’s Tech | YouTube

Zoom lets you share your screen with one other person or with an entire room of people at once. You can also join calls from your computer or tablet via the web browser to participate in real-time conversations with anyone who uses Zoom. 

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Funds and Investments/ Zoom Funding, Its Valuation and Revenue 2021

In the six rounds of venture capital funding, Zoom has raised a total of 146 million dollars. Zoom’s IPO, announced in April 2019, raised an additional 356 million dollars.

For the fiscal year 2018, Zoom made more than 7 million dollars in net revenue. In 2019, payments of 622.7 million dollars were reported, rising year over year. Net revenues increased to 21.7 million dollars. In 2021, its total revenue was $2651 million, up by 326% year-over-year.

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Frequently Asked Questions:

Does Zoom make a profit?

Ofcource Zoom makes a profit. Because it is impossible to run a company without profit for a long time. The revenue of Zoom is US$3.05 billion (As of December 2022).

What is Zoom Business Model?

Zoom is one of the top leading video conferencing platforms worldwide. It is helpful for businessmen, customers, clients, teachers, students, and many other professions. Due to the pandemic situation, Zoom became very popular. The company makes money through its subscription plans and services.

Some Quick Facts:

  • Yuan has introduced a new system, a user-friendly video conference solution for smartphones, to the Cisco administration.
  • When the proposal was denied, Yuan departed Cisco for Zoom Video Communications, his own business.
  • The decision to leave Cisco was prompted by several factors, including that he had accomplished most of his development goals and that Cisco was not interested in the product.
  • While at Cisco, he was involved in video compression research that led to the development of H.264. He received support from Mark Malseed, senior director of broadband technologies at Cisco Systems.
  • After leaving Cisco for Zoom Video Communications, Yuan introduced H.264 to the video compression industry, which has become the dominant standard. It was initially known as H.261 but was renamed H.264 just before it was released on the market in 2004.
  • In 2005, Yuan founded Zoom Telephonics, a zoom camera company that developed wireless video solutions for camcorders and mobile phones. The company took an aggressive approach to graphics and graphics processing; in 2009, it introduced the world’s first full HD wireless smartphone camera system.
  • Yuan’s investments have included, Intuit, Yahoo!, and LinkedIn.
  • He is a member of the board of directors for more than 15 companies, including Zoom Video Communications (acquired by Cisco), Acacia Research (acquired by Tibco), and Imaginova (acquired by Adobe). He has also been a board member at Foundation Capital and an early investor in Twitter.

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